Some customers were just breaking even with cash-for-clunkers or even worse

While many of the domestic automakers
offered steep price cuts on top of "Cash for Clunkers",
many buyers chose to purchase vehicles from foreign manufacturers
instead. Leading the pack was Toyota, whose Corolla was the
leading
vehicle purchased under the program by the first week of August.
Even recently retired Sen. Bill Frist (R-Tenn.) traded in his 1991
Chevrolet Suburban for a brand-new Toyota Prius, joking,
"You don't see a lot of Republicans driving a Prius."

Now it appears that a handful of Toyota dealers raised their
prices to offset the government rebate and cash in on the high
demand for its vehicles.

DailyTech has an exclusive
inside look at some Toyota dealers' so-called "market value
adjustments" (MVAs) on popular vehicles such as the 2010
third-generation Prius hybrid. With the typical sticker
price of the Prius coming it at around $26,000, many dealers across
the country have been charging $3,000 to $10,000 markups, more than
offsetting the "Cash for Clunkers" rebate of $3,000 to
$4,500 in some cases.

On the forum PriusChat, one
customer reports,
"We live in Lake Placid Fl. and could not deal with the dealer
here. One charge they wanted was a market adjustment for this area of
$3999.99 also dealer fees of $695.00."

A number of others
on the same site share similar stories of their own. States one
buyer, "A certain dealer in NJ that I am not at liberty to
mention charges 6500 over sticker and calls it fair market value
adjustment. luckily I found another one close by with better morals.
They are charging sticker price and not a penny more."

Speaking
with a trusted source who had recently been shopping for a Prius,
DailyTech was able to confirm one such dealer that was spiking
prices. Located in the heart of the U.S. auto industry,
Suburban Toyota of Troy, Michigan was charging more than a $2,000
markup on a Prius it had in store.

States our source,
"Suburban Toyota in Troy was one of the ones that wanted a
$2,000 additional fee over the MSRP, to the best of my recollection.
The other places weren't named, but only referred to by a salesman
who was offended by the other dealerships charging what he said was
price gouging. I thought it was like ticket scalping. They know they
have a hot item and could probably sell all they have, even for
$5,000 additional MSRP. The Prius is a great car but they didn't
produce enough, especially ones with the amazing solar roof that
keeps your car cool when it's parked in the summer."

Hoping
to gain further insight into this, DailyTech posed as an eager
buyer and called Suburban Toyota. The following is our
conversation:

DailyTech:
"I've been calling all over trying to find a new 2010 Prius and
no dealerships have any in stock. Do you have any?"Sales
Agent: "We do... it's been sold to Ford but
the sale isn't finalized yet."DailyTech:
"But I heard from another dealer that I might have to pay more
than the MSRP on it -- something about MVA or something like that --
is that true?"Sales Agent:
"Yes"DailyTech: "How
much more?"Sales Agent: "About
$4,000 to $5,000."

The sales agent went on to elaborate
that we might be able to buy it if we moved fast. The agent
explained, "When one comes in, typically it's sold before it
even gets the chance to hit the lot."

DailyTech
then proceeded to contact six other Toyota dealerships in lower
Michigan. None of the other dealers had stock in, but when
related a slightly altered version of the story of the MSRP markup by
Suburban, they all said that they sold their vehicles at MSRP.
A couple expressed shock or surprise at the development, but at least
one commented, "I know who you're talking about."

It
appears that most dealers are clean, but based on the feedback
DailyTech has picked up on in various Prius forums, there are
dealerships in at least several states that are similarly price
gouging on the 2010 Prius via MVA's.

Toyota was
contacted by DailyTech and we are awaiting their
comment.

Markups such as these are really nothing new, but are
typically limited to low-production vehicles or vehicles that have
been recently introduced. The Prius itself has also been the
victim of occasional price gouging since its introduction in the
U.S. While it's unknown exactly how many people were willing to
pay the MVA's on the Prius, the fact that the elevated MSRP erased or
even surpassed the Cash for Clunkers rebate was likely a hard pill to
swallow for many buyers.

Update 1: One of the dealerships DailyTech contacted earlier this morning received a vehicle this afternoon and offered it to our "buyer" at MSRP. This essentially invalidates the argument that no vehicles are available on the local market.

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